Kim fuller ppt

05/01/2305/01/23 11:56 AM11:56 AM GHPIBM (Dept. of MBA), SPUGHPIBM (Dept. of MBA), SPU 11

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Kim FullerKim FullerA Case Study in Managerial AccountingA Case Study in Managerial Accounting

Get Set And…..


Prepared ByPrepared By

Nirav PatelNirav PatelDhaval DaveDhaval DaveMehul RathodMehul RathodNeeta PithiyaNeeta PithiyaPooja ShekhawatPooja ShekhawatRajendra ThakareRajendra ThakareRajul PatelRajul Patel


INTRODUCTIONINTRODUCTION-By Nirav Patel-By Nirav Patel


Kim Fuller, who was working in a large Kim Fuller, who was working in a large chemical firm as a District Sales Engineer.chemical firm as a District Sales Engineer.

He learned that company had developed a He learned that company had developed a use for the recycled material in pulverized use for the recycled material in pulverized form.form.


In November 2006, he checked for initial In November 2006, he checked for initial cost of the business. cost of the business.

For that he bought a truck, three trailers, For that he bought a truck, three trailers, two grinding machine & supplies and parts two grinding machine & supplies and parts to run and maintain the business. to run and maintain the business.


He also purchased a computer, a He also purchased a computer, a warehouse, accounting software. warehouse, accounting software.

He also invested his savings of $75,000. He also invested his savings of $75,000.

He borrowed $90,000 from his two sisters He borrowed $90,000 from his two sisters and a brother for down payment of and a brother for down payment of $50,000 for warehouse.$50,000 for warehouse.


He also hired a truck driver and grinding He also hired a truck driver and grinding machine workers. machine workers.

He took help of his neighbour for learning He took help of his neighbour for learning & purchasing of accounting software.& purchasing of accounting software.


He obtained enough knowledge for He obtained enough knowledge for recording transactions from his neighbour. recording transactions from his neighbour.


ACCOUNTING & NON-ACCOUNTING & NON-ACCOUNTING INFORMATIONACCOUNTING INFORMATION

-By Dhaval Dave-By Dhaval Dave


In this case there are the following classification are available on the In this case there are the following classification are available on the basis of accounting and non-accounting information:basis of accounting and non-accounting information:

Accounting InformationAccounting Information::Owned capital was of $75,000 from his Owned capital was of $75,000 from his savings.savings.

Acquired used truck and 3 trailers, Acquired used truck and 3 trailers, grinding machine, machine part, grinding machine, machine part, personal computer for total of $65,000.personal computer for total of $65,000.


Borrowed $90,000 from two sisters and Borrowed $90,000 from two sisters and brother for down payment of building. brother for down payment of building.

Warehouse of $162,000 and paid Warehouse of $162,000 and paid $50,000 as its down payment.$50,000 as its down payment.


Non-Accounting InformationNon-Accounting Information::Fuller think to start a business of plastic Fuller think to start a business of plastic bottles.bottles.

In Nov 2006, he started to find out the In Nov 2006, he started to find out the cost involved in setting up the business.cost involved in setting up the business.


Found a warehouse.Found a warehouse.

Approval of mortgage from bank for Approval of mortgage from bank for balance of building.balance of building.

Learnt maintaining books of accounts for Learnt maintaining books of accounts for bank dealings, tax returns and general bank dealings, tax returns and general management of the company.management of the company.


List out the purchased items, debts and List out the purchased items, debts and other information in Accounting Software.other information in Accounting Software.

Fuller signed contract with two bottling Fuller signed contract with two bottling companies and started business by companies and started business by hiring grinding machine workers and a hiring grinding machine workers and a truck driver. truck driver.


OPENING OPENING BALANCE SHEETBALANCE SHEET

-By Neeta Pithiya-By Neeta Pithiya


Kim Fuller Ltd. Kim Fuller Ltd. Balance SheetBalance Sheet

as of 31as of 31stst December 2007 December 2007

Assets Amount Liabilities & O.E Amount

Current Assets: Owner's Equity 75,000

Cash/Bank 50,000 Current Liabilities:

Stock 2,000 Family Loan 90,000

Mortgage Loan (Against Ware house) 112,000

Non-Current Assets:

Fixed Assets 63,000

Ware House 162,000

Total 277,000 Total 277,000

Figures in $Figures in $


STRENGTHSSTRENGTHS-By Mehul Rathod-By Mehul Rathod


Excellent location for the business.Excellent location for the business.

Accounting assistance from a neighbour.Accounting assistance from a neighbour.

He researched the entire element before He researched the entire element before starting the business.starting the business.


Ready raw material was available which Ready raw material was available which were cheaper so, he can grab high profit were cheaper so, he can grab high profit due to low total cost.due to low total cost.

He managed to get the borrowed capital He managed to get the borrowed capital from his relatives on relaxable interest from his relatives on relaxable interest rates in comparison to bank interest rate.rates in comparison to bank interest rate.


WEAKNESSESWEAKNESSES-By Rajendra Thakare-By Rajendra Thakare


Because of heavy debt creditor would Because of heavy debt creditor would not like to give him loan.not like to give him loan.

Borrowed capital is more than the owned Borrowed capital is more than the owned capital which result into more interest capital which result into more interest payment.payment.


He invested a huge sum of amount into He invested a huge sum of amount into purchasing the warehouse, which results purchasing the warehouse, which results into less working capital.into less working capital.

He has taken big amount of mortgage He has taken big amount of mortgage loan which result into more interest loan which result into more interest payment. payment.


TRANSACTIONSTRANSACTIONS-By Pooja Shekhawat-By Pooja Shekhawat


Following Transactions were occurred Following Transactions were occurred during the year:during the year:

Purchased raw material worth $1,000.Purchased raw material worth $1,000.Carriage inward $50.Carriage inward $50.Paid wages to workers and truck driver Paid wages to workers and truck driver $1,000.$1,000.Depreciation on Fixed Assets @10%, Depreciation on Fixed Assets @10%, $6,300.$6,300.Purchased accounting software $100.Purchased accounting software $100.


Interest payable for mortgage loan @5%, Interest payable for mortgage loan @5%, $5,600.$5,600.Interest payable to the relatives for the Interest payable to the relatives for the borrowed loan @3%, $2,700.borrowed loan @3%, $2,700.Ware house building appreciated @10%, Ware house building appreciated @10%, $16,200.$16,200.Sales made worth $4,000 (cost price Sales made worth $4,000 (cost price $2,500).$2,500).Closing Stock at the end of year $500.Closing Stock at the end of year $500.


ANALYSIS STATEMENTANALYSIS STATEMENT-By Pooja Shekhawat-By Pooja Shekhawat

OpeningOpening ........


INCOME STATEMENTINCOME STATEMENT-By Rajul Patel-By Rajul Patel


Receipt Amount

Sales Revenue 4000

Appreciation on Building 16200

(a) Total (a) Total 20200Expenses Amount

Wage Paid 1000

Depreciation on Fixed Assets 6300

Interest on Mortgage Loan 5600

Interest on Relative's loan 2700

Carriage Inward 50

(b) Total (b) Total 15650

Net Income (a-b) 4550

Figures in $Figures in $Income Statement for the year ended 2007-08Income Statement for the year ended 2007-08


CLOSING CLOSING BALANCE SHEETBALANCE SHEET

-By Rajul Patel-By Rajul Patel


Kim Fuller Ltd. Kim Fuller Ltd. Balance SheetBalance Sheet

as of 31as of 31stst December 2007 December 2007

Assets AmountLiabilities &

O.E AmountCurrent Assets:Closing Stock 500 Owner's Equity 77050Cash/Bank 51850 Other Liabilities 210300Non-Current Assets:Fixed Assets 63000(-) Depreciation 6300 56700Warehouse 162000(+) Appreciation 16200 178200Accounting Software 100Total 287350 287350

Figures in $Figures in $


SUGGESTIONSSUGGESTIONS-By Nirav Patel-By Nirav Patel


Though Kim Fuller showed some quick decision making Though Kim Fuller showed some quick decision making skill by starting the business at right time, but also skill by starting the business at right time, but also showed immaturity by purchasing warehouse building at showed immaturity by purchasing warehouse building at such an early statesuch an early state

Suppose, if he had taken warehouse on rent for a period Suppose, if he had taken warehouse on rent for a period of 20 years & cost price is $162,000. Then he had to pay of 20 years & cost price is $162,000. Then he had to pay $8100$8100** every year which provides him more working every year which provides him more working capital for day to day operations.capital for day to day operations.

* Rent = * Rent = Property AmountProperty Amount = = $162,000$162,000 = $8100 Per Year. = $8100 Per Year.Time PeriodTime Period 20 20


We are thankful to Mr. Ashish Mehta for his We are thankful to Mr. Ashish Mehta for his valuable suggestions and providing an valuable suggestions and providing an opportunity to prove ourselves .opportunity to prove ourselves .

- Team- Team


Thank you!!!!!Thank you!!!!!

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Kim fuller ppt